Bell Industries Inc. said today that it is in "active negotiations" to sell three remaining real estate properties, and that management continues to explore strategies to further focus the company and enhance shareholder value.
The El Segundo, Calif., distributor also reported results from continuing operations for the second quarter ended June 30, 1999.
In the second quarter, Bell's net sales increased to $60.8 million from $59.3 million last year. Income from continuing operations was $2.1 million, or 22 cents per share. In the second quarter last year, Bell recorded a loss from continuing operations of $1.0 million, or 11 cents per share, principally reflecting substantially higher corporate costs and interest expense required to support the company's former businesses. Bell reported net income of $1.9 million, or 20 cents per share, a year ago, which included income from discontinued operations, net of tax, of $2.9 million, or 31 cents per share.
Tracy A. Edwards, who was elected president and chief executive in February, said the company initiated a corporate resizing program following the sale in January of its $500 million Electronics Distribution Group to Arrow Electronics Inc. The corporate staff has been significantly reduced, the corporate office has been relocated, and, to date, three other real estate properties have been sold, he said.
Second-quarter corporate costs were down 78%, to $674,000 from $3.1 million a year ago, Edwards said. Bell had net interest income of $418,000 for the quarter, compared with interest expense of $3.2 million in the 1998 period. The company currently has no bank borrowings.
Bell's largest remaining business, the Systems Integration Group, posted second-quarter sales of $40.5 million, up from $39.8 million last year. Operating income amounted to $1.4 million, compared with $2.0 million a year ago.
"Results for the Systems Integration Group continue to be negatively impacted by industrywide pricing pressures on computer products,'' Edwards said. "Partially offsetting this adverse trend is our increasing emphasis on expanding services to clients. Historically, services have resulted in higher margins than product sales. To date, services represent approximately 15% of the group's sales, an increase of more than 30% from the prior year."
During the second quarter, Bell made an initial cash distribution to shareholders of $5.70 per share. The payment represented the first portion of a planned distribution of the net proceeds from the sale of Bell's electronics distribution unit and the disposition of certain real estate. The company said it plans to distribute additional cash of approximately $1.30 per share following the sale of its remaining real estate.